The rise into mid May was driven by cyclicals. The cyclical index has also returned to its May break out level today. No harm, yet.
One indicator mentioned today that supports a near-term long is the McClellan, a breadth oscillator. It closed at an unusual low that has consistently been near a profitable bounce. The bounce may eventually fail, but there is normally upside within the week.
On a larger timescale, we will need to see if the uptrend line is broken. A retest of the recent high from two weeks ago over the next month would be a typical pattern (yellow). There could well be a horizontal consolidation period over the next few months as SPX digests the 26% gains it made over the past 6 months. SPX has been up 11 of the past 12 months, a powerful trend.
After a big run where the market gets very overbought, it is common for the market to 'reset' so that it has renewed strength to move higher. Two ways to measure the reset involve breadth. First, the bullish percent index hit an all time high in May (red dots); a reset occurs when it moves below 50% or below 20% (green dots). This would suggest further downside after a bounce.
Second, the percentage of companies in the SPX above their 50-dma was over 90% in May and is now at 53%. A reset in the past has been closer to 20%. These moves take time; think 6-8 weeks as opposed to the two weeks since the highs were made. This also allows sentiment, which is still heady, to cool off.
Treasuries have been recently trending with equities and moving lower due to tapering concerns. Right now, that fear seems overdone. 10 year notes are on support and in a long horizontal channel.
Likewise, 20 year bonds are on the lower rail of a channel. So far, no foul.
Europe has been rallying with the US over the past month. The Europe 350 index is in an uptrend. Today, it traded below its April break out level, however. A watch out.
The All World Ex-US index is in bigger trouble due to weak emerging markets. The rest of the world's equity markets are now back to no-gain for the year.